Bombs galore in movie toy wars

Harry Potter products were a commercial success, as were those from Star Wars (such as Jar Jar Binks, pictured) and The Lion King, but many movie toys have bombed.
Picture: WAYNE TAYLOR

Movies for children and families are among Hollywood's hottest properties. But, to the dismay of many studios, toys based on these movies are getting the cold shoulder from consumers.

Kids, bombarded with toy pitches for just about every movie and TV show they know, haven't been buying enough of them. That has left retailers with loads of leftover Star Wars light sabres and unwanted Pocahontases.

The 1990s were littered with movie toy disappointments - some failing with the films that spawned them, others sinking on their own. Losers included toys associated with Hook, Last Action Hero, Flintstones, Casper, Congo, Dragonheart, and most notably, the Star Wars prequel Episode I - The Phantom Menace. With those and other toy fiascos fresh in their minds, retailers now are more careful in choosing movie toys. Toy makers, in turn, are making fewer film-based characters, games and mementos.

Mattel Inc, America's biggest toy maker, has cut its licensed toy lines by 25 per cent over the past two years, opting to make more original toys instead of weaker film-based games and products. "We're not replicating scenes from a movie any more," said Matt Bousquette, president of Mattel's boys/entertainment division. "When we make movie toys, we're making great toys inspired by a movie."

The cutback in movie-related toys comes just when Hollywood studios need the promotional value of toys more than ever. A trend towards more family entertainment, which has been growing over the past few years, intensified after September 11 as Americans began spending more time at home and with the family. As more consumers turned to what they saw as wholesome amusements, including craft making and playing board games, the film industry saw gentle, nonviolent children's fare surge as well.");document.write("

advertisement

");
}
}
// -->

In response to consumer and political pressure, many studios have also worked hard to pare back their R-rated releases.

During 2001, only 27 per cent of ticket sales came from R-rated films, down from 35 per cent the year before. By the end of the year, five of the six highest-grossing films were family fare, including Harry Potter and the Sorcerer's Stone - the year's leader with more than $US300 million ($A557 million) in domestic ticket sales - along with Shrek, Monsters Inc,The Lord of the Rings: The Fellowship of the Ring, and The Mummy Returns, each of which brought in more than $US200 million in North American ticket sales in December.

Toys and tie-ins involving fast food or other products help to offset the marketing and production costs of such movies. Manufacturers and retailers help to promote films by advertising their own movie-related products. These products also generate additional income for studios through royalties.

Toy industry people say wildly popular movies' strong supporting toys will always sell. Toys based on Harry Potter and the Sorcerer's Stone, for example, were among last year's hottest sellers. Those included Lego's Hogwarts Castle and Mattel's Professor Snape's Potions Class, a cast-your-own-spells toy.

The estimated earnings for the Warner Bros release offer a good reason for Hollywood's interest in toys. Salomon Smith Barney projected $US400 million to $500 million in sales of Harry Potter-related merchandise, resulting in a profit of between $US80 million and $100 million for AOL Time Warner, the studio's parent company. The Potter merchandise largely includes toys, novelties, games, paper goods and other children's play items, as is typical for merchandising based on family films.

The Harry Potter numbers, however, are hardly typical.

Al Ovadia, executive vice-president of Sony Pictures Consumer Products, fondly recalled days when he could promise studio executives $US15 million or $20 million in profit from consumer products licences. Now, he said, those opportunities are few and far between.

The harder line from toy makers and manufacturers is also changing what toys appear on shelves.

Rather than making toys inspired by the newest and most inventive children's films, movie toys are more likely to be based on sequels, TV shows and remakes.

In a recent review of 2002 movie-related toy lines, trade publication the Licensing Letter found that 73 per cent were based on familiar properties, such as current films Spider-Man, Stuart Little 2, Scooby Doo and Birth of the Pink Panther.

The Hollywood studios' power with the toy industry mostly started - and ended - with Star Wars.

Between the original 1977 Star Wars movie and the 1999 release of Episode I - The Phantom Menace, fans bought roughly $US4.5billion worth of Star Wars merchandise, a large portion of which were toys. In between, consumers continued to surprise the studios and toy makers with their appetite for movie-related products.

Walt Disney Co's The Lion King, however, went beyond any product tie-in in history. Within just more than a year of its release, The Lion King generated more than $US300million in toy sales alone - and more than $US1billion in sales of all licensed products. It was then that the studios saw a new pot of gold at the end of the movie rainbow.

More resources flowed into consumer products departments and more money was expected to come back out.

In the rough world of toy making, with thin margins and countless players vying for the year's big hit toy, a company can fold after just one holiday season of poor sales. So, eager to latch on to a solid seller - and to deny those sales to a competitor - toy companies in the 1990s began bidding up the toy licences on even minor movie titles.

"We all got ourselves on a licensing spiral where we all signed everything there was for fear of missing something," said Warren Kornblum, chief marketing officer for Toys R Us Inc. "Everybody (was) chasing a dream and no one (was) making any money doing it - the manufacturers weren't, the retailers certainly weren't."

In part, that was because studios raised royalty rates on their biggest potential blockbusters, increasing the percentage they would get from the sale of each item. They also began raising "guarantees" - up-front payments toy makers had to make even if the movie bombed and the toys didn't sell.

In part as a result of earlier failures, toys associated with more recent children's films - including last year's hits Monsters, Inc, from Disney/Pixar Animation Studios, and DreamWorks/PDI's Shrek - got a far softer sell and much less time on toy sellers' shelves. The more cautious approach meant more limited sales, retailers and toy makers said, even though Monsters toys in particular, sold reasonably well.

Still, toy makers from around the globe bet the new Star Wars prequel of 1999 would be the surest of sure things. Hasbro Inc landed the deal with an eye-popping bid, reportedly giving director George Lucas an up-front royalty guarantee of $US600million and a 7.4 per cent stake in the toy company. Royalty rates on the products were believed to be in the 18 per cent to 20 per cent range, much higher than the typical 12 to 13 per cent. The movie generated $US300 million in toy sales, but it was not enough.